I’ve mentioned just how not different living without credit card debt is from what I expected, and my monthly budget, while different, is still fairly rigid.
But I think that’s a good thing. It means I’m not looking at the $450 or more each month as “extra” now — it’s just money that gets distributed differently.
And boy, do I have a bunch of savings goals!
- Increase emergency fund to $2500. Goal is that the emergency fund will eventually have six month’s salary
- Max out IRA
- Pay off student loans
- Pay off car
Save up for a house, save up for a … whatever? Who knows. I feel like I can’t even start that process until the above steps are complete.
The monthly budget in terms of savings and paying down debts are in the following categories:
- $400 a month on the student loan (increased from $123/month), which Mint says will get me out of student loan debt by November 2013 (I’d like it to be November 2012!)
- $400 a month toward my Traditional IRA (increased from $200/month) — this will get me to $5K, no problem, by the end of this year.
- $203 a month toward the car (no change, it’s the least of my concerns) — projected payoff: August 2014.
- $150 a month toward emergency fund, which will get me to $2500 by November 2012.
Total: $1153 per month, or, just about half my monthly take-home pay. Based on the modified snowball I’m using, anything extra after bills, rent, and savings goals will be dumped on the student loan pile.
This means that although the credit card has been paid off, the frugal lifestyle to which I’ve grown accustomed is still very much in effect.
When I was paying off the credit card, I restricted certain categories of spending. I didn’t get my hair cut. I didn’t buy new clothes. There were other things, but those were the two big ones.
Restricting spending in defined categories really helps me.
Because, of course, there are things I want. A new camera! A new purse! More things to put on the wall!
I’m moving this week, and I’m thinking of things I can cut. I’m thinking now, no new clothes at all until the debt is paid off. That’s not as drastic as it sounds, since there are all kinds of great consignment shops and used clothing stores (I’m looking at you, Goodwill!) all over town, and forcing myself to only shop at those means I’ll build the habit and likely have trouble paying retail at any point in the future… even after I’ve made millions! :)
I think I’ll also consign some more fancy dresses. That way, I won’t feel obligated to wear them and I’ll get a bit of money from them — money that I could use at the same consignment shop for new-to-me party dresses.
Because let’s be real. A person who wears yoga pants to work three days a week does not need seven special-occasion dresses.